26 Feb 2008 20:34 Africa/Lagos
Airline Insurance Market Expected to be Tougher in 2008
Aon's Airline Insurance Market Review 2007 shows less soft market
CHICAGO, Feb. 26 /PRNewswire-FirstCall/ -- The high level of hull and liability claims, at $1.7 billion, coupled with the lowest amount of lead hull and liability premium since 2000 ($1.5 billion), means that the airline insurance market was broadly unprofitable in 2007. The negotiating process is likely to be tougher in 2008 as a result, according to Aon's Airline Insurance Market Review of 2007.
This is the key finding of the review that brings together data for the last year and extrapolates its likely effect on the market in 2008 and beyond.
The review's findings include:
-- total recorded lead hull and liability premium for 2007 was
$1.5 billion, a reduction of 30 percent since 2005;
-- total incurred claims, including hull, liability and an estimate for
attritional losses, amounted to $1.7 billion;
-- North American fleet values, at $192 billion, fell below those of
Europe and Asia, both at $193 billion, for the first time in 2007.
North American passenger numbers, however, were still higher than the
other two major aviation regions;
-- the proportion of passengers travelling with flag carriers has fallen
from 66 percent in 2005 to 48 percent in 2007.
Having started the year with average premium reductions of around 20 percent, the airline insurance market became gradually less soft as the year progressed with underwriters recognising the probability that the value of hull claims would outweigh the total lead hull and liability premium.
"After four years of soft markets, it looks like 2007 may well have seen the cost of airline insurance reach something of an equilibrium," says Doug Peterson, Aon Aviation & Aerospace group practice leader. "Despite the relatively high number of hull losses in 2007, there were fewer fatalities compared to the average over the last decade. Capacity continues to be high, but it seems unlikely that providers will continue to offer the high level of reductions witnessed over the last couple of years. As a result, 2008 looks set to be a fascinating year in the airline insurance markets."
Download the report at http://aon.mediaroom.com/index.php?s=55.
020 7882 0541
Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. Through its 43,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.
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Web site: http://www.aon.com/
NOTE TO EDITORS: The review looks in detail at data from across the aviation market, breaking it down by region, average fleet value (AFV), sector and month, as well as providing a round up of market and industry activity, a comprehensive loss review and examination of the geographic changes in industry profile. It examines how the industry's evolution during 2006 will impact the market during 2007 and beyond.